The Supreme Court and Trump’s Tariffs

We all know that free trade is good and tariffs are bad. As the great Murray Rothbard has said “Political boundaries of nations may be important for other reasons, but they have no economic meaning whatever. Suppose, for example, that each state of the United States were a separate nation. Then we would hear a lot of protectionist bellyaching that we are now fortunately spared. Think of the howls by inefficient, high-priced New York or Rhode Island textile manufacturers who would then be complaining about the ‘unfair,’ ‘cheap labor’ competition from various low-type ‘foreigners’ from Tennessee or North Carolina, or vice versa. Fortunately, the absurdity of worrying about the balance of payments is made evident by focusing on interstate trade. For nobody worries about the balance of payments between New York and New Jersey, or, for that matter, between Manhattan and Brooklyn, because there are no customs officials recording such trade and such balances.

Theory of Money and Cr... Ludwig von Mises Best Price: $2.46 Buy New $8.54 (as of 06:40 UTC - Details) “If we think about it, it is clear that a call by New York firms for a tariff against North Carolina is a pure ripoff of New York (as well as North Carolina) consumers, a naked grab for coerced special privilege by inefficient business firms. If the 50 states were separate nations, the protectionists would then be able to use the trappings of patriotism, and distrust of foreigners, to camouflage and get away with their looting the consumers of their own region. The upshot is that protectionism is not only nonsense, but dangerous nonsense, destructive of all economic prosperity. We are not, if we were ever, a world of self-sufficient farmers. The market economy is one vast latticework throughout the world, in which each individual, each region, each country, produces what he or it is best at, most relatively efficient in, and exchanges that product for the goods and services of others. Without the division of labor and the trade based upon that division, the entire world would starve. Coerced restraints on trade-such as protectionism-cripple, hobble, and destroy trade, the source of life and prosperity. Protectionism is simply a plea that consumers, as well as general prosperity, be hurt so as to confer permanent special privilege upon groups of inefficient producers, at the expense of competent firms and of consumers. But it is a peculiarly destructive kind of bailout, because it permanently shackles trade under the cloak of patriotism.”

But once we know that free trade is good and protectionism is bad, why should we care about the constitutional fine points of the Supreme Court’s decision that invalidated Trump’s tariffs?  The answer is that Trump’s tariffs involved a dangerous concentration of power in the executive branch of the government, moving us closer to a presidential dictatorship.

What did the Supreme Court decide? According to the Ropes & Gray website, “On February 20, 2026, the United States Supreme Court issued its landmark decision in Learning Resources, Inc. v. Trump and Trump v. V.O.S. Selections, Inc., holding in a 6-3 ruling that the International Emergency Economic Powers Act (‘IEEPA’) does not authorize the President to impose tariffs, and invalidating both the ‘Reciprocal Tariffs’ first imposed in April 2025 on ‘Liberation Day’ and the ‘Trafficking and Immigration Tariffs’ relating to fentanyl. The decision, authored by Chief Justice John G. Roberts Jr. and joined by Justices Sotomayor, Kagan, Gorsuch, Barrett, and Jackson, represents a significant check on executive authority and immediately calls into question the legality of tariff revenues collected over the past year. For businesses that have paid tariffs imposed under IEEPA, the ruling opens the door to potential refunds, though the path to recovering those payments remains uncertain. This alert summarizes the Court’s decision, explains its implications for tariff refunds, identifies the tariffs that remain in effect, and outlines recommended next steps for affected businesses. The Supreme Court in Learning Resources concluded that the power to impose tariffs is ‘very clear[ly] . . . a branch of the taxing power’ that Article I, Section 8 of the Constitution vests exclusively in Congress. While some tariffs are not directly implicated by the Court’s ruling following delegations of authority by Congress under other statutes, the Court rejected the Government’s reliance on IEEPA to defend the challenged duties. The Court not only struck down the Reciprocal Tariffs and the Trafficking and Immigration Tariffs in particular but also held more broadly that IEEPA does not authorize the President to impose tariffs.”

In an article on the Mises.org site, Stephen O. Anderson goes into more detail about the case and the arguments presented to the Supreme Court: “The Supreme Court of the United States (SCOTUS) ruled 6-3 on February 20, 2026 tossing the legal basis of President Trump’s tariffs in the lead case of Learning Resources, Inc. v. Trump (tariffs) whether the International Emergency Powers Act (IEEPA) authorizes the president to impose tariffs: ‘The challengers contended that Trump did not have the power under IEEPA to impose the tariffs.’ The core of the legal case argued before SCOTUS on November 5, 2025, was the IEEPA enacted in 1977. Part of IEEPA states,. . .the president can invoke it ‘to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States,’ if he declares a national emergency ‘with respect to such threat.’ Under Section 1702 of the law, when there is a national emergency, the president may ‘regulate … importation or exportation’ of ‘property in which any foreign country or a national thereof has any interest.’ What Has Government Do... Murray N. Rothbard Best Price: $7.04 Buy New $6.50 (as of 05:50 UTC - Details)

“Many Mises Wire and Power and Market articles were constructively critical of Trump’s tariffs given the past 200 years of tariffs being a total loss to all parties involved in international trade. Austrian economics believes tariffs inhibit free trade under the false premise of protecting domestic producers, industries, and consumers.

President Trump’s tariffs executive orders began in February 2025, based on IEEPA. The executive orders implemented two tariff groups. Group one was trafficking tariffs  ‘. . . targeted products from China, Canada, and Mexico,’ which, Trump says, have not done enough to stop the flow of fentanyl into the U.S.’ The second group were reciprocal tariffs,. . imposed an initial tariff of 10% on imports from almost all countries and even higher tariffs on products from dozens of countries.’ In imposing the reciprocal tariffs, Trump pointed to large trade deficits as an ‘unusual and extraordinary threat to the national security and economy of the United States.’

“Frank Shostak—associated scholar at the Mises Institute—penned a Mises Wire article in May 2025, entitled, ‘US Trade Account Balance and the Imposition of Tariffs’ debunking the trade deficits threat. Representing the Trump administration before SCOTUS, US Solicitor General D. John Sauer, ‘. . . told the justices that IEEPA ‘confers major powers to address major problems on the President,. . .’ ‘The phrase ‘regulate … importation,’ he added, ‘plainly embraces tariffs, which are among the most traditional and direct methods of regulating importation.’ Neal Katyal—representing the small businesses—countered that the decision, ‘It’s simply implausible in enacting IEEPA Congress handed the President the power to overhaul the entire tariff system and the American economy in the process’—as evidenced by the fact that no other president in nearly 50 years ‘has ever tried to impose tariffs’ relying on that law. Indeed, Katyal insisted, Congress knows exactly how to delegate its tariff powers. Every time for 238 years, it’s done so explicitly, always with real limits.’

“Sauer received many questions from Justice Elena Kagan, ‘. . .for example, emphasized that Congress – not the president – had ‘the power to impose taxes, the power to regulate foreign commerce.’ Justice Kagan understands something about tariffs. Sauer countered that President Trump’s authority under IEEPA, in imposing the tariffs, was not exercising a power to tax; instead, he said, the tariffs were simply ‘regulatory.’ Justice Sonia Sotomayor was unconvinced by Sauer’s tariffs as a regulatory argument: ‘It’s a congressional power, not a presidential power, to tax,’ she told Sauer. ‘And you want to say tariffs are not taxes, but that’s exactly what they are. They’re generating money from American citizens, revenue. Justice Sotomayor sees tariffs as a tax. A number of conservative SCOTUS justices were skeptical of D. John Sauer’s arguing that extending the IEEPA language to support President Trump’s executive orders on tariffs was legally logical. One SCOTUS reporter observed in the oral arguments,. . .’a majority of the justices appeared to agree with the small businesses and states challenging the tariffs that they exceeded the powers given to the president under a federal law providing him the authority to regulate commerce during national emergencies created by foreign threats. This SCOTUS ruling is a refreshing rebuttal limiting executive branch power to implement President Trump’s troublesome tariffs by executive order through IEEPA. Time will tell if Congress will act on its authority to pass any future tariff legislation. Many Austrian economic followers hope Congress will not take up the topic of tariffs since these are a tax on trade and should be abandoned into the trade policy trash bin.”

Man, Economy, and Stat... Murray N. Rothbard Best Price: $23.43 Buy New $29.95 (as of 08:10 UTC - Details) Law school professor John O. McGinnis inquires, “What will be the long-term effects of the decision, other than the holding that IEEPA does not authorize the president to impose tariffs? One legal implication is that the Court’s historic solicitude for deferring to the president, in which ‘foreign affairs’ is invoked may be waning, in part because of the turn toward originalism. In cases such as United States v. Curtiss Wright, the Court previously deployed a kind of atextual foreign affairs exceptionalism to protect exercises of presidential power that the Court might otherwise have struck down (there, under the non-delegation doctrine). But here six justices joined in that part of the chief justice’s opinion that distinguishes tariffs from foreign affairs because the authority over foreign commerce lies in Article I, not Article II. There is thus no constitutional reason to interpret presidential statutory authority broadly, in which that authority depends on a legislative grant from Congress. As the Americans have known since the Revolution, a tariff trenches on our domestic liberties, even if it affects foreigners too.”

William Galston, a Fellow at the Brookings Institute, finds that the decision has important implications for our system of limited government: “When we focus on the implications of the Supreme Court’s decision striking down President Trump’s sweeping tariffs for democratic institutions and governance, four points stand out. First: Based on the administration’s legal victories on procedural issues during the first year of the president’s second term, it was possible to conclude that the Court’s conservative majority was putting partisan politics ahead of judicial responsibility. The Court’s tariff decision weakens this claim. Not only did three conservative justices join the three liberals in a broad, unequivocal rejection of the administration’s position, but also, two of the three conservatives were Trump appointees. The Court is still able to function as the independent third branch of government the Founders envisioned. Its decisions in the remainder of the current term will determine whether this display of independence extends to other key cases.

“Second: While President Trump is not the only recent president to expand executive power at the expense of Congress, he has gone the farthest. By reasserting the dominant role of Congress in matters of taxation, the Court has drawn a line against further executive aggrandizement in this area. Third: While President Trump denounced the decision and rebuked conservative justices who supported it, he accepted it as binding and moved immediately to replace policies based on IEEPA with others drawing on different legal authorities. The speed of this shift means that the administration had prepared for the possibility of an adverse ruling and had made a considered judgment not to reject or resist it. Because tariffs are so central to Trump’s economic agenda, there is reason to believe that the administration will comply with the Court’s decisions across the board, averting what some feared would be a constitutional crisis. . .Fourth: Although President Trump invoked Section 122 of the Trade Act of 1974 to impose 10% global tariffs (soon raised to 15%), these tariffs must end in 150 days unless Congress votes to extend them. Not only does this requirement recognize the central constitutional role of the legislative branch in taxation but it will also require members of the House and Senate to take responsibility for the votes they may well be asked to cast just a few months before the 2026 midterm elections. Accountability of elected officials to the people is at the core of our constitutional system, and the Court’s decision has helped fortify it.”

Let’s do everything we can to make sure that Trump’s unconstitutional and immoral attempt to impose dictatorship stays repealed!

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